Sustainability Report

Sustainability Report Contents Highlights 2013 The only acceptable model for future growth Orkla’s sustainability work Food and product safety Nutr...
Author: Austen Garrett
8 downloads 0 Views 10MB Size
Sustainability Report

Contents

Highlights 2013 The only acceptable model for future growth Orkla’s sustainability work Food and product safety Nutrition and health Responsible purchasing Environment Occupational health and safety People Orkla and society About the report

The leading Nordic branded consumer goods company

1

Orkla ASA is listed on the Oslo Stock Exchange and headquartered in Oslo, Norway. Orkla is a leading supplier of branded consumer goods and concept solutions to the grocery and out-of-home sectors in the Nordic and Baltic regions. In addition, the Group holds good positions in certain product categories in India, the Czech Republic, Austria, Poland and Russia. The company is also a major supplier to the European bakery market. Orkla’s vision is to improve everyday life with healthier and more enjoyable local brands. The Group also operates in the aluminium, hydropower and real estate sectors. As at 31 December 2013, Orkla had around 17,000 employ-ees. The Group’s turnover in 2013 totalled NOK 33 billion. Number of factories: 97 (businesses in which Orkla has a more than 50% ownership interest) Number of countries in which we operate: 28

by business area

Orkla Foods Orkla Confectionery & Snacks Orkla Home & Personal Orkla International Orkla Food Ingredients Gränges Hydro Power Other Business Total sales revenues (NOK million) 1

9,730 4,755 4,743 2,508 5,939 3,895 639 7

30% 15% 15% 8% 18% 12% 2% 0%

32,216

100%

Excluding internal sales and other operating revenues.

Key figures* Operating revenues (NOK million) EBITA (NOK million) 1

EBITA1 margin (%) Ordinary profit before tax (NOK million) Diluted earnings per share (NOK) Return on capital employed, industrial activities (%) 2

Total dividends per share (NOK) Equity ratio (%)

2013

2012

2011

2010

2009

33,045

30,001

61,009

57,338

56,228

3,163

3,295

4,041

3,944

2,448

9.6

11.0

6.6

6.9

4.4

2,664

3,873

-923

20

1,071

0.7

1.6

-0.8

-0.9

2.5

11.1

12.9

10.7

10.5

5.2

2.503

2.50

2.50

7.50

2.25

59.1

53.9

51.8

53.6

51.7

*Figures as reported in 2009-2012. 1 Operating profit before amortisation and other income and expenses. 2 EBITA* / (Average net working capital + Average tangible assets + Average intangible assets at cost – Average net pension liabilities – Average deferred tax excess value) 3 Proposed dividend.

OPERATING REVENUES

EBITA 1

EARNINGS PER SHARE

Group operating revenues totalled NOK 33.0 billion.

Group EBITA1 totalled NOK 3.2 billion.

Earnings per share were NOK 0.7 in 2013.

Business areas Orkla Foods

Orkla Confectionery & Snacks

Orkla Home & Personal

Orkla International

Orkla Food Ingredients

Operating revenues (NOK million):

Operating revenues (NOK million):

Operating revenues (NOK million):

Operating revenues (NOK million):

Operating revenues (NOK million):

9,797

4,784

4,770

2,644

5,998

EBITA1 (NOK million):

EBITA1 (NOK million):

EBITA1 (NOK million):

EBITA1 (NOK million):

EBITA1 (NOK million):

1,275

682

823

-86

288

Number of man-years:

Number of man-years:

Number of man-years:

Number of man-years:

Number of man-years:

4,083

2,247

1,738

4,957

2,366

Associated companies and joint ventures

Other businesses

Gränges

Hydro Power

Rolled aluminium products EBITA1 (NOK million):

EBITA1 (NOK million):

337

213

Shares and assets

Orkla Eiendom (real estate)

Value (NOK billion):

Book value (NOK billion):

1.1

2.3

Pro forma EBITDA* (NOK billion):

EBIT* (NOK billion):

1.1

1.3

Corporate centre and support functions The figures from associated companies and joint ventures are on a 100 % basis. Operating profit before amortisation and other income and expenses.

*

1

Highlights 2013 IMPORTANT RESULTS

Mattrygghet Food safety

S

S

Ernæring og helse Mattrygghet

Miljø Nutrition and Ernæring og helse health

Miljø Miljø

Mattrygghet Ansvarlige innkjøp Miljø

S

Ernæring og helse

We carried out food safety audits at 55 % of our food production plants.

We will maintain our strict food safety procedures and ensure high, uniform standards at all our plants.

We launched Felix Smart Mat a range of climate-smart, healthy forcemeat products, in Sweden.

We will further develop the smart food concept and intensify our focus on nutrition and health.

All varieties of Pizza Grandiosa in Norway have a lower salt content.

The knowledge gained in the SALTO project will be used to reduce salt in other Orkla products.

We helped to draw up Norwegian guidelines for marketing food and beverages to children and adolescents, and to establish the Food and Drink Industry Professional Practices Committee (MFU).

In 2014, Orkla will ensure that the new voluntary guidelines are effectively implemented in the Group’s businesses.

Responsible purchasing procedures have been implemented in 23 of our companies. These companies account for a total of around 85 % of Orkla’s purchasing.

By 2020 Orkla will ensure that all purchasing is compliant with Orkla’s Supplier Code of Conduct and our principles for sustainable production.

We have reduced our use of palm oil by 15,000 tonnes in the period 2008–2013.

All palm oil used in Orkla products is to be produced in compliance with Orkla’s sustainable production standards by 2017 at the latest.

All the cocoa we purchase for use in Nidar chocolate is 100% UTZ certified.

Our goal is to ensure that all cocoa purchased by Orkla is sustainably produced by 2020.

100% of Abba herring, the raw materials for Abba fishballs and Kalles kaviar (fish roe spread) are MSC certified.

By 2015, all herring, cod and hand-peeled shrimp in brine are to be MSC certified or come from MSC certified fisheries.

More than 92 % of Orkla’s production waste is recycled or used to produce biogas, other energy or animal feed.

We will seek to reduce the total amount of waste and further increase the recovery rate.

We have conducted a study to learn more about how the production of our raw materials affects the environment.

In 2014, we will use this knowledge to draw up ambitious targets for our environmental efforts.

Ansvarlige innkjøp

Responsible Miljø Mattrygghet purchasing

OUR PLANS AHEAD

Miljø S

Ernæring og helse

Miljø

Ansvarlige innkjøp

Miljø

Environment

Ansvarlige innkjøp

MESSAGE FROM THE CEO

The only acceptable model for future growth

Sustainability Report

4

As the leading branded consumer goods company in the Nordic region, Orkla is committed to promoting a sustainable value chain. This is not just our responsability – it also makes good business sense.

WHAT WE SEE The global population now exceeds 7 billion people and is growing by 77 million every year. At the same time, climate changes are increasing in scale, causing extreme weather conditions in more and more parts of the world. The growth in population and consumption, combined with climate change, is putting increasing pressure on agricultural raw materials, fish and seafood. At the same time, consumer demands with respect to health, product quality, the origin of raw materials and the environment are steadily growing. The trend that we are now seeing calls for a willingness to subject ourselves to critical scrutiny, and to engage in a dialogue on how we as a society can join forces to ensure healthy, safe and sustainable products for generations to come. WHAT WE DO We have identified four areas in which we exercise the greatest influence and where our efforts can contribute to a sustainable value chain.

2013

Food safety: Being able to trust that the food we eat is safe is fundamental. Good food safety systems, uniformly applied, are therefore a top priority at Orkla. Safe products require a continuous, sustained effort, and we invest substantial resources every year in training, audits, quality control and improvement measures. Nutrition and health: We are committed to developing healthier products, and have reduced the amount of salt, sugar and saturated fats in a variety of products in the past few years. Toro’s long-term efforts to lower the salt content in soups, sauces and casseroles are a good example of this focus. Since 1983, the amount of salt has been reduced in all of the Toro products, and in some of them it has been halved.

Responsible purchasing: We are committed to ensuring that the production of our raw materials does not lead to overexploitation of natural resources or breaches of labour or human rights. Our decision to use UTZ certified cocoa is a good example of responsible purchasing. In 2013, we reached our goal of buying 100% UTZ certified cocoa for all Nidar chocolate. This means that the cocoa farmers in Côte d’Ivoire receive close follow-up, training in better agricultural practices and a higher price for their cocoa. Environment: By improving energy efficiency, reducing water consumption and curbing wastage, we save costs while reducing the environmental impact of our operations. One of many examples of win-win environmental initiatives in 2013 is Orkla Foods Sverige’s investment in a production plant for plastic bottles. This is a profitable investment which will reduce CO2 emissions from the transport of bottles. WHAT WE WANT Although we are making progress, we must admit that much remains to be achieved. Nonetheless, the direction that we must take is clear: sustainable production is the only acceptable model for future growth. We want Orkla to be associated with good raw materials and safe products. We want to make products that are healthier and more enjoyable and that make life simpler for consumers. Orkla has been a signatory of the UN Global Compact since 2005, thereby pledging to uphold the UN’s Ten Principles with respect to human rights, labour rights, the environment and anti-corruption efforts in our day-today operations. Through this work, we have experienced how dialogue and collaboration across industries and centres of expertise can make what is difficult easier and the impossible possible. In keeping with the spirit of the Global Compact, we will actively seek to pursue a dialogue. We are convinced that by making a concerted effort to resolve major issues, we can make a difference. I hope that this report gives you a good picture of where we stand and our ambitions for our sustainability work. At the same time, I encourage you to contact us if you have views on how we can improve.

Peter A. Ruzicka President and CEO

5

Sustainability Report

6

2013

ORKLA’S SUSTAINABILITY WORK

ORKLA’S SUSTAINABILITY WORK

The big picture The world is facing major sustainability challenges that will have a significant impact on Orkla and the communities of which we are a part. Lifestyle diseases are increasingly prevalent.

Population growth and pressure on raw materials

Accelerating climate change and increased scarcity of natural resources

Climate change and population growth are

access to GMO-free raw materials and potential new pathogenic bacteria 7

Our response to these challenges Nutrition and health We seek to promote better public health by developing healthier products, providing good consumer guidance, marketing our products responsibly and collaborating with national health authorities and external research communities. Responsible purchasing By making conscious choices in our use of resources, setting clearly defined requirements for suppliers and engaging in multi-stakeholder collaboration on solving complex challenges, we strive to promote sustainable production in our supplier chains. Food and product safety We are committed to ensuring that the food we make is safe to eat and our products safe to use, by means of stringent requirements for raw materials and production processes and systematic training, risk management and control procedures.

The environment Through systematic improvement efforts, both in our own operations and in collaboration with suppliers, we aim to reduce our energy consumption and minimise the greenhouse gas emissions related to Orkla products. Moreover, we work continuously to increase production yield and reduce waste. We are aware that this is important for both the environment and Orkla’s profitability. Occupational health and safety Through effective risk management and preventive health efforts, we aim to achieve zero injuries in our operations. Human resource development and corporate culture By investing in our employees’ development and cultivating good judgement, we seek to create a strong organisation for the benefit of individuals, Orkla, our customers and society at large.

ORKLA’S SUSTAINABILITY WORK

Our approach to sustainability Orkla seeks to promote the sustainable production of food and grocery products through responsible operations and systematic improvement efforts. Sustainability Report

8

As the leading Nordic manufacturer of food and branded consumer goods, we have a farm-to-fork responsibility. We consider it our corporate responsibility to conduct our operations with respect for individuals and the environment, in a way that creates positive ripple effects for the communities around us. Furthermore, we regard responsible operations as a prerequisite for commercial success. Orkla’s ability to achieve long-term, profitable growth is contingent on our understanding of the way in which the global challenges related to nutrition and health, climate change and natural resource scarcity affect our operations, and on our active contribution to solving the challenges related to our own value chain. OUR FOOTPRINT Our food products and other grocery products are purchased regularly by several million consumers, and affect their diet, health and well-being. Even small changes in product content can bring about important improvements in public health.

2013

Orkla’s food production makes us one of the largest purchasers of agricultural and fishery raw materials in the Nordic region. In addition, we affect the environment through our use of energy and water and our purchases of packaging and transport services. Orkla is also involved in certain global commodity chains that pose complex economic, social and environmental challenges. Orkla is a large employer with a significant number of production plants and operations in many countries. Consequently, we have a considerable influence on our employees’ well-being, health and personal development. Moreover, Orkla companies create economic ripple effects in the form of jobs, tax revenues and purchasing from local suppliers in the communities and countries in which we are present. Based on a mapping of Orkla’s footprint, we have identified the following topics as the main areas of focus for our

corporate responsibility: • Nutrition and health • Responsible purchasing • Food safety and product safety • Environment • Occupational health and safety • Human resource development and corporate culture For each of these focus areas, we have formulated guidelines and principles with which every company in the Group must comply. Every year, we review the companies’ work by means of internal status reports. In the past few years, Orkla has made progress in all six main focal areas. By providing training for management and key personnel, improving our internal reporting procedures and engaging in a more active dialogue with external stakeholders, we have increased awareness of Orkla’s sustainability challenges. Efforts related to food safety, nutrition and health, responsible purchasing and environment are carried out by the individual companies, with support from specialist staff at central level. In 2014, to ensure that Orkla manages sustainability-related risk effectively, and optimally exploits the potential offered by sustainability trends, we will draw up targets and strategies for our work on these four topics in the period up to 2020.

XXX

Sustainability Report

10

2013

FOOD AND PRODUCT SAFETY

FOOD AND PRODUCT SAFETY

A matter of trust Good food safety systems, uniformly applied, are top priority at Orkla.

cover all risk factors of particular importance for Orkla’s food production.

It is essential that we are able to trust that the food we eat is safe. This means, first and foremost, that food and drink manufacturers must take responsibility for people’s health and put in place good food safety procedures throughout the value chain.

The OFSS sets stringent requirements for production premises, management procedures, expertise and operating procedures, and process and product control. The standard includes procedures for hazard analysis and critical control points (HACCP) in production. The OFSS is regularly evaluated by Orkla’s central food safety department, which makes decisions on improvements as necessary in consultation with Orkla’s Group Executive Board.

Our position on food safety

All food products launched by Orkla have undergone a thorough risk assessment in the course of the development process to identify and control potential health hazards associated with ingredients, packaging and use. AUDITS All Orkla companies that manufacture food, beverages and dietary supplements must meet OFSS requirements, and compliance is monitored by means of regular audits. Since the introduction of the OFSS in 2004, a total of 589 audits of Orkla’s own factories have been carried out. Binding plans describing corrective measures, assigning responsibility for measures and setting implementation deadlines were prepared in connection with all the audits.

At Orkla we address this issue by establishing systematic quality and control procedures in all our businesses. Through our own Orkla Food Safety Standard, we ensure high, uniform standards at all our factories. Furthermore, we insist that our suppliers comply with our stringent guidelines for safe raw material production. The main risk issues are pathogenic bacteria, undesirable substance content, allergens, foreign bodies and the risk of sabotage. SAFE FOOD PRODUCTION The Orkla Food Safety Standard (OFSS) is designed to ensure a high, uniform standard of quality in food production at all Orkla’s manufacturing facilities. The standard is based on the British Retail Consortium (BRC)’s internationally recognised food safety standard, and has been further developed by Orkla’s central food safety department to

TRAINING Orkla has a team of eleven highly qualified internal food safety auditors. The auditors regularly undergo training with external specialists. The training programme provided through the Orkla Food Safety Training Course has been well attended, especially by quality control and production employees in charge of food safety at Orkla factories. Since the course was started up in 2010, 92 employees have completed the training programme. CONTINGENCY MANAGEMENT Orkla has drawn up a contingency plan to deal effectively with unforeseen and undesirable incidents. Based on this plan, our companies carry out emergency exercises at regular intervals. Our factories are also required to conduct emergency food safety drills at least once a year. Although we do everything we can to prevent undesirable

11

FOOD AND PRODUCT SAFETY

incidents, we had a major emergency in 2013 arising from the lack of traceability of certain meat consignments. For precautionary reasons, Procordia1 chose to recall its kebab minipizzas and three tinned products sold in Sweden. On the same occasion, Orkla Foods Romania recalled a minor product and Orkla Foods Finland recalled two varieties of pizza from the Finnish market. No harm of any

kind to health as a result of consumption of the products concerned has been reported.

AUDITS Results in 2013 In 2013, 56 food safety audits were carried out, compared with 64 in 2012. The audits covered 55 % of Orkla’s food production facilities.

TRAINING Results in 2013 A total of 16 persons participated in the Orkla Food Safety Training Course in 2013, compared with 12 in 2012.

Goal for 2014 The food safety team will continue their efforts to ensure continuous improvement by conducting internal audits based on the Orkla Food Safety Standard.

Goal for 2014 The Group will continue to provide training in and monitor food safety in production in 2014.

In addition, there were 14 minor incidents. Several of the matters were related to allergens that were not listed on the product label. This resulted in some recalls, but no consumers suffered any negative effects.

Sustainability Report

12

2013

1

Procordia, Abba Seafood and Frödinge have been merged to form Orkla Foods Sverige.

Our food safety value chain

Raw materials supplier approval and monitoring.

Transport

Receiving inspection

Production

Warehousing

Transport to customers temperature.

13

FOOD AND PRODUCT SAFETY

Food safety in purchasing Orkla conducts regular supplier audits to ensure that raw materials are produced in compliance with our stringent food safety guidelines.

Orkla’s central food safety training centre holds courses for quality and purchasing staff in use of the portal, and trains internal food safety auditors. Since Orkla’s system for food safety in purchasing was introduced in 2008, around 300 employees have participated in training programmes.

Orkla has a large number of raw material suppliers all over the world. As a condition for collaboration, we require that our suppliers comply with the Orkla Supplier Code of Conduct. We also set strict food safety requirements.

SUPPLIER MONITORING By following up on suppliers by means of selfassessment forms and physical audits conducted by Orkla’s audit team, Orkla ensures that they are highly aware of the importance of good food safety standards.

Orkla’s system for food safety in purchasing consists of guidelines for risk identification and supplier audits, audit tools, supporting documents and an IT portal for registering information about suppliers and documenting the measures carried out.

Some 66% of the factories audited in 2013 met approved food safety standards. Other factories must make improvements in order to be able to continue to supply products to Orkla.

15

TRAINING Results in 2013 A total of 32 employees received training in supplier auditing in 2013, compared with 34 in 2012. Furthermore, 28 previously qualified auditors participated in a refresher course in 2013.

SUPPLIER MONITORING Results in 2013 In 2013, 1,219 self-assessment forms were distributed to Orkla’s suppliers, compared with 863 in 2012. A total of 118 physical audits were carried out, compared with 127 in 2012.

Goal for 2014 Efforts related to in-house training, supplier audits and supplier monitoring will continue in 2014.

Goal for 2014 Efforts related to systematic risk assessment, and the approval and monitoring of suppliers, will continue in 2014.

FOOD AND PRODUCT SAFETY

Product responsibility in companies that do not manufacture food products In the same way as in our food production, we follow very strict product safety guidelines in developing cleaning products, textiles and personal care products. Sustainability Report

Safe products and safe consumers are Orkla’s number one priority. We tolerate no non-conformities that might endanger the consumer, and we set stringent quality requirements at every stage of the value chain, from innovation and product development to the manufacturing process of Orkla’s suppliers or Orkla’s own factories, right up until the product reaches the consumer.

16

The Orkla companies that do not manufacture food products have established quality and product safety standards. This applies to Lilleborg (detergents and personal care products), Pierre Robert Group (textiles) and Orkla House Care (renovation and painting equipment). SAFE INGREDIENTS When developing personal care products, Orkla uses only ingredients which have well-documented properties, and which are in compliance with strict EU requirements. Research is continuously carried out on chemical ingredients. Orkla and Lilleborg follow this work closely to stay abreast of new knowledge.

2013

Orkla’s consumer safety efforts are based on the precautionary principle. The companies systematically focus on substitution, replacing ingredients that may have a negative impact on health or the environment with more benevolent alternatives. NEW RULES FOR COSMETICS The new EU Cosmetic Regulation (EC) No 1223/2009 entered into force on 11 July 2013. The new regulation focuses even more than before on consumer safety and rights, and sets new, stricter requirements for risk assessments and documentation of product claims.

1

Phthalates are a group of substances used in many everyday products, for instance as plastic softeners (plasticisers) and as additives in ethanol to make products with a high alcohol content impossible to drink.

Lilleborg is currently reviewing the documentation for a total of 250 product ingredients and more than 100 products to ensure that they are in compliance with the new regulation. PRODUCT SAFETY FOR TEXTILES All products manufactured by Pierre Robert Group are covered by chemicals regulations that are in line with, or stricter than, the EU Regulation on the use of chemicals. Spot tests are regularly carried out, in which products are tested by independent laboratories. To date, no non-conformance with safety requirements has been found in connection with Pierre Robert Group’s products.

SUBSTITUTION Based on a precautionary approach, Lilleborg works systematically to eliminate ingredients that may have a negative impact on health or the environment. Results in 2013 • New phthalate1 -free perfumes are now used in several cleaning products. • The perfume in some skin care products was replaced because new research showed that it could cause reduced fertility. • Preservatives that may potentially cause allergies were replaced, with particular focus on disposable wipes. • Tests aimed at eliminating aluminium from antiperspirants began. • Work began on ensuring the use of sustainable palm oil. • Goals for 2014 • Develop aluminium-free deodorants. • Continue efforts to ensure use of sustainable palm oil. • Eliminate phthalates from all Lilleborg products

FOOD AND PRODAUCT SAFETY

Orkla’s position on gene technology Orkla products must be based on safe raw materials and be manufactured using methods that customers and consumers accept. Orkla is responsive to customers’ and consumers’ views on the use of gene technology in connection with the manufacture of food products. There are no research findings that indicate that eating food containing genetically modified raw materials is harmful to health. Nonetheless, Orkla has decided not to use such materials, since a clear majority of consumers do not accept genetically modified raw materials and ingredients. Orkla’s food manufacturing companies use only raw materials and ingredients based on traditional production methods that do not involve the use of gene technology. Orkla’s food manufacturing companies are aware that

some traditional crops (primarily soybean, maize and rapeseed) and products derived from them may contain traces of genetically modified material due to the unintentional introduction of extraneous seed, crop or product. The maximum quantity of such traces that does not require GMO labelling is specified in the European legislation on genetically modified organisms. Orkla’s food manufacturing companies require their suppliers to establish verifiable systems for separation, documentation and analysis to make it possible to verify the origin and quality of products, including the absence of unintentionally introduced GMO material. Orkla’s food manufacturing companies comply with EU and national legislation and official requirements with respect to GMOs, and take all necessary steps to ensure that no Orkla products require GMO labelling. If a company is considering marketing and selling products that require GMO labelling, this must be approved by Orkla’s Board of Directors.

17

XXX

Sustainability Report

18

2013

NUTRITION AND HEALTH

NUTRITION AND HEALTH

A healthier everyday life Orkla wants to make it easier for people to have a balanced diet. In 2013, we have made substantial progress in our efforts to develop healthier products.

The global challenges posed by overweight and lifestyle diseases call for a concerted effort by all sectors of society. Overconsumption of salt, sugar and saturated fat, combined with lack of physical exercise, is among the leading causes of cardiovascular diseases, diabetes, high blood pressure and a multitude of other related ailments. According to WHO, 1.5 billion people are now overweight. This includes 200 million school-age children and over 40 million children under five years of age.

Our approach to nutrition and health

consumers to make healthy choices. In the past few years, we have intensified our focus on fish, grain products with a high fibre content and natural food with no artificial additives. We have also reduced the content of sugar, saturated fat and salt in several of our products. Innovation requires a thorough knowledge of the way food affects the body. In 2014, Orkla will develop a Group-wide training programme on nutrition for employees involved in innovation and development work. Orkla’s food businesses also work closely with several external centres of expertise to find effective solutions to the challenges we face. RESEARCH PROJECTS • Orkla Foods Norway is heading the SALTO project, a three-year joint project carried out by several Norwegian food companies and food researchers at Nofima, SINTEF and the Norwegian University of Life Sciences. The aim of the project is to reduce the amount of salt in everyday foods such as cheese, boiled ham, patés and forcemeat products by 25-50 %. • Orkla Foods Sverige is engaged in research collaboration with the Igelösa Life Science Community on the development of healthy, climate-friendly foods, based on a high content of vegetable raw materials. This collaboration has resulted in the launch of food products with beneficial nutritional and environmental properties under the brand name FELIX Smart Mat (smart food). This research partnership will be further developed in 2014. • Several Orkla companies are working with the Antidiabetic Food Centre at the University of Lund, Sweden, on developing food products designed to reduce the risk of obesity, age-related diabetes and cardiovascular diseases. In 2013, Orkla Foods Sverige utilised the knowledge gained from this project to launch new varieties of food under the Paulúns brand. The three joint projects will continue in the period 2014-2015, and the research results will be applied in Orkla’s innovation work.

INNOVATIONS FOR BETTER PUBLIC HEALTH Orkla’s ambition is to promote healthy eating. As a leading manufacturer of food, beverages and dietary supplements in the Nordic region, Orkla can make a positive contribution to public health by developing products that make it easier for people to maintain a balanced diet and encouraging

CONTACT WITH AUTHORITIES Orkla engages in an active dialogue with the health authorities in many of the countries in which the Group operates on the framework conditions for its activities and its efforts to promote a healthier lifestyle. In 2013, Orkla participated in meetings with the Norwegian Ministry of Health and Care Services to discuss the establishment of new voluntary

19

NUTRITION AND HEALTH

guidelines for food and drink marketing (see page 25). Orkla businesses also took part in meetings with the Danish Veterinary and Food Administration and the Swedish National Food Agency on new criteria for the Green Keyhole label for healthy products.

Sustainability Report

CONSUMER GUIDANCE Good information on products’ nutritional content is essential to enable consumers to make sensible choices. We at Orkla want to make it easy to choose a balanced, nutritious diet. Information on the nutritional content of our products must be fact-based, easy to understand and as easily accessible as possible. In 2013, Orkla drew up internal guidelines for clear, uniform nutritional labelling of foods which apply across companies and product categories. The guidelines cover information on types of

ingredients, nutritional content, allergens, certification schemes and use of other voluntary labelling schemes. Work on implementing these guidelines will begin in 2014. A growing number of consumers wish to have additional guidance. The Orkla companies therefore have special consumer service staffs who deal with complaints and other inquiries. The companies also provide information on nutritional content, allergens and other relevant issues on their websites. Orkla’s businesses have good procedures for assuring the quality of nutrition and health claims. In 2013, there were five minor issues related to labelling rules, none of which entailed a fine.

Omega-3 for better memory 20

Axellus and the Antidiabetic Food Centre (AFC) at the University of Lund, Sweden, have studied the impact on cognitive effects (working memory and selective attention) of giving healthy elderly persons omega-3 supplements. The study was conducted on 38 healthy individuals between 50 and 70 years of age over a period of five weeks. The results show that the subjects of the study who received omega-3 (Pikasol) performed significantly better in tests of working memory than those who were given a placebo. The study was published in BioMed Central, Nutrition Journal, 2012.

2013

GDA AND THE GREEN KEYHOLE LABEL FOR HEALTHY PRODUCTS Results in 2013 • A total of 2,800 products now bear expanded nutrition labels under the voluntary Guidance Daily Amount (GDA) labelling system. • 37 products carry the Green Keyhole label. A total of 2.5 % of Orkla Foods Sverige’s turnover derives from Keyhole-labelled products. Goal for 2014 We will begin implementation of common guidelines for nutrition information.

NUTRITION AND HEALTH

Healthy, natural food Several of Orkla’s products are part of the everyday diet of many consumers, and even small changes in salt, fat and sugar content can bring about major improvements in public health.

Orkla’s food businesses work systematically to reduce the quantities of salt, sugar, saturated fat and artificial additives in food.

Good for your stomach and our climate In collaboration with the Igelösa Life Science Community, Orkla Foods Sverige took an important step towards the food of tomorrow by launching FELIX Smart Mat (smart food) in 2013. This range of products is an entirely new concept, featuring climate-smart, wholesome forcemeat products. The forcemeat patties contain less meat, and the vegetarian millet products contain adequate protein. FELIX Smart Mat products are available in Sweden.

Development work is challenging because changes in products can affect shelf life, taste and consistency. The development of healthier foods therefore requires thorough risk assessments, testing and innovative approaches to the use of raw materials, recipes and production processes. SUGAR Overconsumption of energy-rich foods and beverages poses a serious global challenge. Norwegian health authorities recommend that the total sugar content in a person’s diet should not exceed 10% of his or her daily energy intake. We at Orkla wish to reduce the sugar content in our products, insofar as taste and commercial considerations allow. This is particularly important in the case of cordials, sauces and other foods that are part of a basic diet.

Products with less salt In the past few years, we have worked hard to reduce the amount of salt in several of our products. For example, we have lowered the salt content in all varieties of Pizza Grandiosa in Norway by up to 30% since 2008. TORO has also considerably reduced the salt content in its products, which now contain 0.7-0.9% salt.

SALT Salt is an important taste enhancer in food. However, a high salt intake has been shown to increase the risk of high blood pressure, cardiovascular diseases and other health problems. Norwegian and international health authorities recommend limiting the daily intake of salt to five grams. The average intake of salt in the Nordic region is estimated to be around 10 grams per day. Orkla does not wish to use more salt than necessary in its products. If salt is important to improve the taste, we look for alternative ingredients that can be satisfactory replacements for salt. SATURATED FAT There is a proven link between high intake of saturated fat and increased production of LDL cholesterol, which is associated with a risk of cardiovascular disease. The Norwegian health authorities recommend limiting the total content of saturated fat in a diet to a maximum of 10 % of energy intake.

Taste- and odour-free omega-3 oil Denomega’s plant in Ålesund produces a totally taste- and odour-free omega-3 oil. The plant uses fresh fish such as salmon, cod and sea trout to make the healthy oil, which is an ingredient in a wide range of dietary supplements, foods and beverages. Denomega targets the B2B market and its largest customers are in the USA, Europe and Asia.

21

NUTRITION AND HEALTH

We aim to reduce the percentage of saturated fat to improve the fat composition in the Group’s products. This is particularly important for foods that are basic dietary components, but we also consider it important to choose beneficial fatty acids for products such as snacks and biscuits.

Sustainability Report

22

In the past few years, we have made active efforts to reduce the content of saturated fat in several of our products. We have focused particular attention on the chips and snacks categories in the Nordic region, where we have cut saturated fat by more than 50 % in several products. FIBRE AND WHOLE GRAINS A number of international studies show that the intake of fibre and whole grains has a beneficial effect on cholesterol in the body and lowers the risk of cardiovascular diseases. Norwegian and international health authorities recommend eating at least four portions of whole grain products every day, which is the equivalent of 70-90 grams of whole grain per day. Similarly, the health authorities recommend a daily intake of 25-35 grams of fibre. Most people eat too little fibre and whole grain. At Orkla we therefore consider using ingredients with a high fibre and whole grain content wherever relevant. Examples are pizzas, breakfast cereals, pasta, whole grain biscuits and bread ingredients. ALLERGENS There is growing consumer concern about food allergies. According to the European Academy of Allergy and Clinical Immunology (EAACI), 1-5% of the European population have some form of food allergy.

2013

Consumers must always feel confident that Orkla products are safe. We aim to ensure that good information and product labelling enable persons with allergies to avoid specific allergens. In 2013, Orkla Foods Sverige further developed Felix ParNut, a brand targeting the catering industry. The product range consists of meatballs, meat patties and other forcemeat products that are guaranteed to contain no gluten, lactose, milk protein, soybean protein or egg protein. TORO also has long-standing traditions of developing products that are gluten-, egg- and milk-free. In collaboration with the Norwegian Coeliac Society (NCF), TORO has created a special range of gluten-free products. A great many ordinary TORO products, such as soups, sauces, casseroles, pizza fillings and Rett-i-koppen instant soups, are also gluten-free.

In 2013 Orkla Foods Sverige launched a new version of Paulúns Granola, which is fibre-rich and contains no added sugar. The cereal contains only natural raw materials and is available in several flavours: hazelnut and dates, cardamom and mulberries, and cocoa and raspberries. Paulúns is sold in Sweden.

Naturally sweet with no calories Stevia is a plant with a natural sweetener that can help to reduce consumption of sugar. The leaves from the stevia bush contain glycosides, which are several hundred times sweeter than sugar, yet calorie-free. Orkla has launched several stevia-sweetened products in the past year, under brands such as FUN Light, Ekströms, Felix tomatketchup and Nutrilett.

Palm oil free Reducing consumption of palm oil has a significant effect on people’s overall consumption of saturated fat. Since 2008, Orkla has decreased its use of palm oil by 15,000 tonnes. This is equivalent to a reduction of around 6,500 tonnes in the saturated fat supplied to the Nordic population. In 2013, Cheez Doodles, Digestive biscuits, Marie kjeks and Sætres pepperkaker containing no palm oil were launched. In 2014, Sætre aims to eliminate palm oil from Kornmo, Tom & Jerry and Bokstavkjeks biscuits.

Developing healthier food

In the period 2009-2013 we have reduced the content of saturated fat in several of our products. The effect of this

products that are sugar-free or that have a reduced sugar content. Efforts to reduce saturated fat will continue in 2014. Our 23

the beverage and sauce categories. We will also consider reducing the sugar content in other relevant categories.

Fibre and whole grain

content in a number of our products. The effect of this

Efforts to reduce salt will continue in 2014 in several relevant categories.

grain will continue in 2014 in categories where this is considered relevant.

NUTRITION AND HEALTH

Responsible marketing of food Orkla’s marketing must be informative, engaging and based on the principle of responsibility.

Our position on marketing to children

Orkla is a major advertiser, and its companies’ marketing reaches a substantial number of consumers. Emphasis on responsible marketing is therefore important to ensure that we do not mislead consumers or create undue pressure to buy. The Group pursues a restrictive policy with respect to marketing to children and adolescents. In the period 2012-2013, Orkla participated actively in the formulation of new voluntary guidelines for marketing of food and beverages to children and adolescents in Norway, and in the establishment of the new Food and Drink Industry Professional Practices Committee (MFU), which is tasked with dealing with complaints concerning food and drink marketing. Orkla is represented on both the new Committee and the Committee Board. Orkla’s Legal Affairs Department and the Group’s nutrition and health staff provide guidance for the companies on marketing law and interpretation of the guidelines. In 2014, Orkla will ensure that the new voluntary guidelines are effectively implemented in the Group businesses. In 2013, Orkla had no matters arising from marketing regulations which resulted in a fine. There were six minor matters related to the use of claims in advertising or marketing designs.

MARKETING Results in 2013 We helped to draw up Norwegian guidelines for marketing of food and beverages to children and young people, and to establish a control body, the Food and Drink Industry Professional Practices Committee. Goal for 2014 In 2014, Orkla will ensure that the new voluntary guidelines are effectively implemented in the Group businesses.

25

XXX

Sustainability Report

26

2013

RESPONSIBLE PURCHASING

RESPONSIBLE PURCHASING

Partnering for a sustainable future Orkla is committed to promoting sustainable development by making conscious choices in its use of resources, setting clearly defined requirements for its suppliers and working in partnership to solve complex challenges.

ORKLA’S SUPPLIER CODE OF CONDUCT Orkla collaborates with suppliers all over the world. We require that all the companies with which we work, irrespective of country, comply with our Supplier Code of Conduct. These business ethics standards describe the requirements that our suppliers must meet with respect to human rights, labour rights and social conditions, environmental performance and anti-corruption efforts.

Sustainable development means meeting the needs of today’s population without compromising the ability of future generations to meet their own needs. According to the WWF’s Living Plan Index, the global population now consumes resources equivalent to those of 1.5 planet Earths. The consequences are serious, including growing food scarcity and reduced species diversity. In the same way,

Orkla’s efforts to promote responsible purchasing are based on three main principles: 1. Communication of our Supplier Code of Conduct to suppliers 2. Identification of the risk of breaches of these requirements 3. Follow-up of suppliers at risk of breaching requirements through dialogue, audits and guidance

Our position on responsible purchasing

A total of 23 companies have implemented, or are in the process of implementing, procedures for risk identification and supplier monitoring. These companies account for a total of approximately 85% of Orkla’s purchasing1.

breaches of fundamental human rights and exploitation of labour are leading to social instability in a number of countries.

RISK IDENTIFICATION The large number of Orkla suppliers makes it important to give priority to monitoring the suppliers and raw material chains assessed as being at greatest risk of non-compliance with Orkla’s Supplier Code of Conduct . To identify at-risk suppliers, the companies carry out a rough risk assessment of their supplier portfolio. The assessment is based on known factors relating to country, industry and production process which entail a risk of breaches of human rights, working conditions, environmental standards or anti-corruption rules. All suppliers of raw materials and packaging and other important suppliers2 have been subjected to this type of general risk assessment. New suppliers also undergo such risk assessments, and are required to accept Orkla’s Supplier Code of Conduct, which is appended to their contract.

The overexploitation of natural resources and breaches of labour rights are neither ethically acceptable nor compatible with sustainable development. Our response to these challenges is unequivocal: sustainable, fair production is the only acceptable model for future growth.

Some 85% of Orkla’s purchasing comes from suppliers assessed to be at low risk of material breaches of the Supplier Code of Conduct, 6% from suppliers assessed to be at medium risk, and 9% from suppliers assessed to be at high risk of such breaches.

1

Applies to Orkla’s branded consumer goods business. Important suppliers are identified on the basis of purchased amounts and the product’s importance for operations.

2

27

.

1

Sustainability Report

28

Europe excl. Nordic and Baltic regions NOK 4,025 million

2013

North and South America

1%

NOK 175 million

1

Applies to Orkla’s branded consumer goods business.

23 %

66 %

Nordic and Baltic regions

6%

Russian Federation NOK 1,050 million

NOK 11,550 million

29

4%

0%

Africa NOK 4 million

Asia NOK 700 million

RESPONSIBLE PURCHASING

In the case of potential at-risk suppliers, a more detailed risk assessment is undertaken. The suppliers are asked to carry out a self-evaluation based on a standardised method developed by the Supplier Ethical Data Exchange (Sedex). The evaluation covers the supplier’s procedures with respect to human and labour rights, working conditions, the external environment and anti-corruption efforts. At the end of 2013, a total of 170 of Orkla’s suppliers were registered in Sedex, equivalent to 80% of the suppliers classified as high-risk suppliers.

Sustainability Report

THOROUGH AUDITS The Orkla companies follow up on potential at-risk suppliers by engaging in dialogue, conducting audits and providing guidance. Business ethics audits are carried out in cases

100

80

30

60

40

20

% of total no. of suppliers

where a company feels a need for a more detailed, independent assessment of the supplier’s procedures and practices with regard to working conditions, workplace health and safety, protection of the external environment and anti-corruption efforts. All audits are summarised in a non-conformance report and corrective action plan, and the supplier must undertake to remedy the identified non-conformities within an agreed time period. The most common non-conformities are lack of adequate protective equipment, inadequate fire safety, first aid and noise protection procedures, excessive use of overtime, and non-conformities related to pay and overtime compensation. No matters were found which resulted in the termination of collaboration with suppliers.

Råvareforbruk (tonn) Grønnsaker 85 % Sukker og stivelse Oljer/fett Korn Frukt og bær Meieriprodukter Kakao Sjømat 6% Kjøtt Egg Low Medium risk

risk

31 % 27 % 12 % 9.0 % 8.5 % 5.0 % 2.5 %

9%

2.5 % 2.3 %

High risk

0.3 %

2013

RISK ASSESSMENT Results in 2013 In 2013, Orkla carried out an assessment of risk factors and potential corrective action for raw material categories that present complex challenges in the supplier chain. Goals in 2014 In 2014, Orkla will draw up general goals and guidelines for further efforts with respect to cocoa, palm oil, fish and seafood, vegetables, fruit and berries, nuts and seeds.

AUDITS Results in 2012–2013 In this period, Orkla carried out 59 business ethics audits of its suppliers. A total of 194 non-conformities were found, 107 of which have been corrected. In seven of the audits, minor non-conformities were found with respect to human rights, labour rights and working conditions. These mainly concerned inadequate procedures. Goals in 2014 All potential high-risk suppliers are to be audited in 2014. Non-conformities identified in earlier audits will be followed up.

RESPONSIBLE PURCHASING

In 2013, Ekströms launched the first Swedish Fairtrade-labelled “kladdkake” (Sveden’s version of brownies). The cake is baked in accordance with the classic recipe, but using Fairtrade-certified cocoa and sugar. Fairtrade is an international labelling scheme that supports farmers and workers in poor countries through trade. Fairer trade conditions empower farmers and workers to combat poverty themselves.

COMPLEX COMMODITY CHAINS Orkla companies are involved in certain commodity chains that present complex challenges. The most important of these are cocoa, palm oil, fish and seafood, vegetables, fruit and berries. The production of these raw materials may present serious challenges with respect to poverty, child labour, breaches of labour standards, unsustainable farming and fishing methods, reduced species diversity, greenhouse gas emissions and land ownership conflicts. Several Orkla companies are engaged in improvement projects related to the above-mentioned raw materials. These include use of certification schemes and participation in industry initiatives and collaborative projects involving companies, authorities and expert organisations.

COMPETENCE-BUILDING In 2010, Orkla established an internal network for responsible purchasing, in which purchasing staffs from the various companies participate. The network is headed by Orkla’s central purchasing department, and is used for training and experience-sharing purposes. Responsible purchasing is also a topic covered in Orkla’s leadership development programme and in the Group’s purchasing, marketing and sales training programmes. In 2013, a total of 845 hours of training were provided for 82 management staff and employees. The corresponding figures for the previous year were 1,300 hours of training for 90 employees. Skills-building courses and exchange of experience will continue in 2014.

IEH The Ethical Trading Initiative Norway (IEH) is a membership-based centre of resources and expertise on ethical trade, comprising companies, public sector enterprises and organisations. IEH works to achieve trade that promotes human rights, labour rights, development and the environment. IEH members pledge to engage in concrete, targeted improvement work over time. Orkla is a member of IEH, with which it conducts a dialogue on ongoing improvements. In 2013, Axellus participated in a working group chaired by the IEH on improvement work in the fishery sector in Peru. AIM-PROGRESS Orkla is a member of AIM-PROGRESS, an international industry network that cooperates on courses and other improvement activities in the supplier chain. Sedex Sedex is an organisation that offers solutions for standardised risk identification and simple information-sharing. Orkla uses Sedex to identify at-risk suppliers.

31

RESPONSIBLE PURCHASING

Protecting the rainforest The rainforest is the world’s oldest, most diverse ecosystem. Animals, plants and indigenous peoples living in rainforest areas are endangered by the unsustainable production of palm oil. Sustainability Report

Palm oil is the most commonly used vegetable oil in the world. Global production totals around 56 million tonnes per year, and has doubled in the past decade. Palm oil is used in a wide range of consumer goods, such as margarine, snacks, breakfast cereals and soap. Orkla uses palm oil in some of its products. For nutritional and environmental reasons, several Orkla companies have decided to eliminate palm oil from their products. The companies that use palm oil are in the process of switching to certified palm oil.

32

2013

DEFORESTATION AND CLIMATE CHANGE A substantial part of the global production of palm oil takes place in Indonesia and Malaysia. Rainforests are being cut down to establish new palm oil plantations. This deforestation has a negative impact on species diversity in the forests and leads to extensive greenhouse gas emissions, which in turn contribute to climate change around the world. Cutting down the rainforest has also had disastrous consequences for the indigenous peoples who live in these forests. OUR AMBITIONS We have an ambition to contribute to rainforest conservation.

We will therefore replace the palm oil in our products with alternatives that are both healthier and more environmentally friendly. Where this is not possible, we aim to buy only sustainably produced palm oil. Palm oil certification schemes have been established, for instance through the Roundtable on Sustainable Palm Oil (RSPO). These certification schemes are designed to ensure that production is carried out in a sustainable manner. Several of Orkla’s food manufacturers buy oil that is RSPOcertified (certificates or mass balance system). In future, Orkla will intensify its efforts to achieve traceability of the palm oil’s origin and to promote sustainable production. We are committed to ensuring that palm oil is produced without cutting down rainforests or draining peat marshes and with respect for human rights. Our goal is for all palm oil used in Orkla products to be produced in accordance with sustainable principles by 2017 at the latest. To achieve this objective, we will require our suppliers to meet strict standards and use relevant certification systems.

PALM OIL Results in 2008–2013 Orkla reduced its use of palm oil by 15,000 tonnes in the period 2008–2013. Goal By 2017 all palm oil used in Orkla products is to be produced in compliance with Orkla’s sustainable production standards.

RESPONSIBLE PURCHASING

Sustainable cultivation of cocoa West Africa accounts for almost 70% of the world’s cocoa production. Poverty, weak infrastructure and lack of agricultural know-how increase the risk of breaches of labour and human rights.

buys only cocoa certified by UTZ Certified for the entire Nidar brand. The certification scheme enables cocoa farmers to make a living from cocoa, and ensures that it is cultivated with the interests of both the people and the environment in mind. Orkla Confectionery & Snacks Finland and Kalev also buy cocoa through this certification programme.

There are a total of 1 million cocoa farms in West Africa, most of them small and family-run. Small farms, limited farming knowledge, illiteracy and poor infrastructure all contribute to the fact that many cocoa farmers have too low an income, that children and adolescents take part in work, and that many children do not go to school.

In 2013, Orkla conducted an analysis of the challenges associated with cocoa, and started work on a joint strategy for the companies in the Orkla Group. The new strategy will be in place in 2014.

Orkla wishes to contribute to improving the incomes and living conditions of the cocoa farmers. It is important to us that the fundamental rights of children are observed. Children must not be exposed to risk or take part in the family’s work at the expense of their schooling. Orkla has committed to sustainable cocoa cultivation through a number of projects. Orkla Confectionery & Snacks Norway

SUSTAINABLE PRODUCTION OF COCOA Results in 2013 All the cocoa we purchase for use in Nidar chocolate is 100% UTZ certified. Goals for 2014 Increase the proportion of UTZ-certified cocoa in chocolate and other relevant food products from Orkla.

33

RESPONSIBLE PURCHASING

A blue planet The ocean covers 71% of the Earth’s surface and constitutes 95% of all areas suitable for life. Sustainable management of marine resources is crucial to maintaining a viable diversity of marine species.

Sustainability Report

According to the UN Joint Group of Experts on the Scientific Aspects of Marine Environmental Protection, the destruction of habitats for marine species and the introduction of non-native species are the primary threats to global marine life. Orkla has long been engaged in a range of initiatives to protect the marine environment. Under the Abba and Kalles brands, Orkla Foods Sverige manufactures seafood products for the Swedish market and for export to a number of countries. The fish is sourced from all over the world.

34

2013

Every year, the company carries out an assessment of the sustainability situation for fish and shellfish, and establishes purchasing plans that ensure that the raw materials come from sustainable stocks. Ensuring that this is the case may be difficult, and the company gives priority to maintaining a close dialogue with external experts and environmental organisations, such as the Marine Stewardship Council (MSC 1) and the Swedish organisation KRAV. The tonggol (longtail) tuna species, which is fished in the Andaman Sea and the South China Sea, poses special sustainability challenges. Working with the organisation Sustainable Fisheries Partnership, Orkla Foods Sverige therefore runs a public-private project, with support from the Swedish International Development Cooperation Agency (SIDA), aimed at assuring the long-term sustainability of tonggol tuna fishing for the future. In 2013 the project received further grants from SIDA for three more years of work. This project, involving close collaboration between industry, scientists, the authorities and NGOs, the project is creating a sound basis for the organic and sustainable management of longtail tuna stocks in the future. The project is making good progress. Important milestones in 2013 included the development of a draft management plan agreed to by the Thai authorities and a decision reached by the countries in the region to collaborate on management of this tuna species. Towards

the end of the year, moreover, a project coordinator was hired to promote greater knowledge of the project in Thailand and facilitate work at the local level. Follow the progress of this project at www.sustainablefish. org/fisheries-improvement/tuna/thai-tonggol FISH OIL PRODUCTION AT AXELLUS For Axellus, which is part of Orkla Home & Personal, monitoring of quality and production conditions in the facilities of raw material suppliers and contract manufacturers is of key importance. In 2013, the company succeeded in establishing certification for cod liver oil and fish oil. Möller’s Tran is made from fresh liver from Arctic cod, which is a sustainable cod stock. In 2013, the factory at Løren was certified by the environmental organisation Friend of the Sea. This certification also covers Denomega, which supplies taste- and odour-free omega-3 oil to the industrial market. The Denomega factory at Leknes in northern Norway also received MSC certification in 2013. In 2011, critical attention was focused on the environmental and social conditions related to the production of fish oil in Peru, which is used in omega-3 capsules. Axellus has intensified its control procedures with respect to its suppliers’ operations, and is engaged in a dialogue with the Peruvian authorities. The challenges associated with production in Peru concern the entire omega-3 industry. Axellus and several other players are therefore participating in a joint industry initiative aimed at addressing the environmental challenges presented by fish oil production in Chimbote, Peru. This work is headed by the Ethical Trading Initiative Norway (IEH). SUSTAINABLE FISHING Results in 2013 A total of 189 of Orkla’s food products based on fish and other marine raw materials are MSC-certified . All of Abbas herring products are MSC-labelled. 100% of all the fish raw materials used in Abbas fishballs and Kalles kaviar spread come from MSC-certified fish stocks. Möller’s Tran cod liver oil was certified under the Friend of the Sea scheme in 2013. Goal in 2014 All hand-peeled shrimps in brine produced under the Hållö brand are to be MSC-certified by the end of 2014.

1 The Marine Stewardship Council (MSC) is a certification body that has developed an environmental standard for sustainable fisheries. MSC requires that • fishing must be at a level that is sustainable for the fish stocks • fishing must be carried out in a way that preserves the structure, productivity, function and diversity of the ecosystem on which the fishing is based, • the fishery must be in compliance with all local, national and international legislation

RESPONSIBLE PURCHASING

Responsibility in textile manufacturing

Sustainability Report

Respect for employees’ rights is fundamental to a sustainable enterprise Through Pierre Robert Group, Orkla has collaborated with Chinese suppliers in the textile industry to improve the working conditions of textile workers.

The Orkla company Pierre Robert Group is Norway’s largest supplier of socks and underwear to grocery stores. The company has 29 suppliers with 41 factories, located mainly in China (70 %) and southern Europe (30 %). All the factories are contract producers for Pierre Robert Group, which thus has no ownership interests.

36

2013

Pierre Robert Group has been working closely with its suppliers for a number of years to improve their textile workers’ working and employment conditions. Both the suppliers and Pierre Robert Group are investing more resources in compliance with the increasingly stringent requirements and regulations governing the use of chemicals in manufacturing. In addition to ensuring better working conditions for textile workers, the collaboration and compliance have proved to result in deliveries of a higher, more stable quality.

December of unacceptable conditions for animals kept to produce angora wool. As a result, a seasonal item containing angora (Season Socks) was dropped from Pierre Robert Group’s range, and there will be no products containing angora fibre in the range until we can be sure that the animals are kept under acceptable conditions. Merino wool is produced by a special breed of sheep that produces extra soft, fine-fibred wool. New Zealand, South Africa and Australia are all major suppliers of merino wool to the world market. As a result of the special climate in Australia, merino sheep may be subjected to painful and dangerous attacks from flies (flystrike). To prevent this, some sheep stations in Australia employ a painful procedure called mulesing 1. It is possible to prevent flystrike by more humane methods, and Pierre Robert Group is therefore strongly opposed to mulesing. Pierre Robert Group only buys merino wool from suppliers who can document that their sheep have not been subjected to this procedure.

ANIMAL WELFARE Pierre Robert Group’s sourcing of wool raises the important issue of animal welfare. The company imposes stringent requirements on its suppliers, and does not tolerate unethical or inhumane treatment of animals. News was received in

RAISING INTERNAL AWARENESS Results in 2013 In 2013, Pierre Robert Group held internal seminars on manufacturing for all employees. The aim was to provide a better picture of the conditions in manufacturing, what requirements are imposed, and how suppliers are monitored. Goals for 2014 Continue to raise both the awareness and the competencies of all employees, to better enable them to support Pierre Robert Group’s sustainability efforts. Mulesing entails the removal of strips of skin from the sheep’s buttocks.

1

AUDITS In 2013 Pierre Robert Group performed audits of 22 of its suppliers in China as a means of ensuring that working and manufacturing conditions and products are consistent with the company’s ethical and technical quality requirements. The audits did not reveal serious breaches of the Supplier Code of Conduct.

RESPONSIBLE PURCHASING

Food manufacturers collaborate on berries Orkla Foods Sverige has joined other commercial operators to improve the working conditions of berry-pickers in Sweden.

This collaboration has resulted in an industry agreement that, amongst other things, stipulates requirements regarding minimum pay for workers and regarding living conditions and hygiene locally during their stay. The workers also receive information as to what the job entails before they commit themselves to travelling to Sweden.

Orkla considers it important to stipulate clear requirements for fair and sustainable working conditions for our suppliers’ workers. In recent years, the employment conditions of foreign berry-pickers in Sweden have been criticised for being substandard.

The purpose of the industry agreement is to ensure that berries are only bought from suppliers who offer their berry-pickers good working conditions. Ideally, the market for dubious suppliers will then cease to exist.

Orkla Foods Sverige is engaged through its trade organisation the Swedish Food Federation (Livsmedelsföretagen) in joint efforts to improve working conditions for berry-pickers. Other participants include retailers, trade unions, the Swedish Migration Board, the non-profit organisation Swedwatch and berry wholesalers.

Orkla Foods Sverige conducts its own audits and spot tests to ensure that the berry-pickers’ work situation is acceptable, and that their employers comply with the guidelines. We are involved in an active dialogue with our suppliers to ensure that our intentions and instructions are correctly interpreted. The collaboration will continue in 2014. 37

Sustainability Report

38

2013

ENVIRONMENT

ENVIRONMENT

With a mission to reduce the burden on the environment Our goal is to reduce energy consumption and minimise emissions of greenhouse gases in all parts of our value chain.

Global climate change is without a doubt the greatest environmental challenge facing the world. The changes we are experiencing will affect people’s livelihoods in terms of food production, access to water, health and the physical environment. The question is how to ensure social and economic development without causing irreparable damage to the environment.

Our position on global climate challenges

Access to raw materials, water, energy and other resources is essential to our activities. Orkla is intent on assuming responsibility for the environment and minimising the impact of all parts of our value chain. Going forward, it will be important for us to consider the environmental impact associated with the production of raw materials, and how we can help to reduce emissions and water and energy consumption. We also want to ensure that raw materials are produced in areas where the land use is not detrimental to the environment. OUR EFFORTS TO PROTECT THE ENVIRONMENT We aim to create awareness and engagement among all our employees regarding our impact on the environment. We cut costs through more efficient use of energy, reduced water consumption and less waste, and at the same time reduce the burden imposed on the environment by our activities. In Orkla, the individual company is responsible for ensuring that environmental work is a part of daily operations. The companies hold internal training courses and plan, implement and report on environmental work. At factory level, the management is assisted by specialists in training personnel and in the day-to-day environmental work. Our business areas coordinate the companies’ work, and are responsible for their annual reporting.

Recycling of waste heat spares the environment In 2013, Orkla Confectionery & Snacks Norge invested in a number of different energy saving measures to recover heat energy from manufacturing processes at Nidar’s Trondheim factory. Heat from steam condensate and cooling processes is collected and used to heat buildings and water. The project has received a subsidy of NOK 1.5 million from ENOVA. Over the past ten years, the Nidar factory has reduced its energy consumption by 20%.

Less food wastage

Orkla Foods Sverige has worked with the organisations Allwin in Kungshamn and Hjälp i Stan in Eslöv to reduce food wastage. These organisations distribute products with a short shelf life to the homeless and others in need. Orkla Foods Sverige also cooperates with local authorities and farmers in several places in Sweden to recycle food waste to biogas or animal feed.

39

ENVIRONMENT

Sustainability Report

ENERGY Reducing energy consumption is one of Orkla’s most important measures for sparing the climate in the near term. A number of our companies have scrutinised their consumption of energy and examined the possibilities of using it more efficiently. The study shows that our energy consumption is primarily related to the use of heat in our factories, several of which have replaced oil with gas or propane. We want to use renewable energy wherever possible. MTR Foods in India is a good example. They produce some 15 GWh per year by burning coconut shells, which used to be a waste product.

EMISSIONS Each year, Orkla prepares energy and greenhouse gas accounts based on the International Greenhouse Gas Protocol Initiative. The accounts are also reported to the Carbon Disclosure Project (CDP). In 2013, emissions of greenhouse gases in Orkla’s branded consumer goods production amounted to 130,000 tonnes of CO2 equivalent. If emissions from purchased energy are included, emissions totalled approximately 258,000 tonnes of CO2 equivalent1. This is a reduction of approximately 6 % on 2012, even given increased production and several new branded consumer goods factories.

Orkla’s own hydropower production in Norway amounted to 2.1 TWh in 2013, compared with 2.7 TWh in 2012. The total energy consumption in Orkla’s branded consumer goods business in 2013 was 1.17 TWh, compared with 1.28 TWh in 2012.

Other emissions to air and water are monitored locally, using the requisite monitoring systems and plans. Emissions to the air are primarily SO22 and NOx3 due to combustion of fossil fuels for heat energy. Discharges to water are mainly organic compounds, measured as COD4, and fat from manufacturing processes, which are regulated by local authorities. In 2013 one case resulting in follow-up by national authorities was registered. The incident involved discharge as a result of a fault in the water treatment facility at Boyfood Oy, Finland, which may result in a fine.

40

300000

1500000

250000

1200000

Klimagass utslipp (tonn) 900000

Elektrisitet Fjernvarme Propan/LPG Naturgass Tung olje Fyringsolje Egne biler Prosess

600000

2013

300000

200000 150000 100000 50000 0

MWh

10

11

12

13

1

10

11

12

13

“CO2 equivalent” is a term used to show the effect of a given quantity of CO2 on global warming over a specific time period. In climate accounts, emissions of all kinds of greenhouse gases are translated into CO2 equivalent.

2

SO2 (sulphur dioxide): emissions of SO2 lead to acidification.

ENVIRONMENT

WATER Water is a prerequisite for all life on earth, and a fundamental requirement for all people. Fresh water is in increasingly short supply in many parts of the world, mainly as a result of strong population growth, climate change and topographical factors. In many cases, water is a crucial factor in the manufacture of our products. In order to operate in a sustainable manner, we need to reduce water consumption throughout our value chain. Orkla’s total water consumption in 2013 was 7.5 million m3, which is the same level as in 2012. Approximately 12% of the water used is recycled in our own manufacturing processes. Some 67% of discharge water is treated in Orkla’s own or a municipal treatment facility. The remaining water is primarily cooling water that has not become polluted.

WASTE One of the global environmental challenges is the increased volume of waste and food wastage. We all have a responsibility for ensuring that less food is thrown away, and that our resources are utilised more effectively. In Orkla we work continuously to improve production yield and reduce waste. This is important for both the environment and Orkla’s profitability, and will be in even greater focus in 2014. The total amount of waste generated by our branded consumer goods business in 2013 was 98,000 tonnes. Increased production and several new factories have resulted in an increased volume of waste in 2013. More than 92 % of the recorded waste is further utilised in the production of biogas, other energy production, animal feed and material recovery.

The production of many agricultural raw materials, particularly cocoa and oils, requires a great deal of water. The total water consumption related to the production of Orkla’s raw materials is 1,200,000 million m3, of which 92% is green water, 7% grey water and less than 1% blue water5. 41

100

100000

80

n av råvarer (m ) (%)

60

40

20

80000

Avfall(tonn) Dyrefor Biologisk behandling/Biogass produksjon Gjødsel Materialgjenvinning Energi (forbrenningsanlegg) Deponi Spesialavfall

% Tonnes raw materials

Water footprint

"Blue water" footprint

60000

40000

20000

0

10

11

12

13

3

NOx (nitrogen oxide): emissions of NOx contribute to respiratory diseases, formation of ground-level ozone and acid rain.

4 5

COD (chemical oxygen demand): a measure of the amount of chemically degradable organic matter in water.

”Blue water” is surface water (from streams, rivers, lakes) and groundwater.”Green water” is water from the soil”. Grey water” is recycled water

ENVIRONMENT

RAW MATERIALS The production of raw materials is the part of our value chain with the strongest impact on the environment. The cultivation of agricultural raw materials6 and animal husbandry generate large quantities of greenhouse gases and the consumption of energy and water is high. It is therefore important for us to maximise the yield of the raw materials while minimising wastage in the value chain.

Sustainability Report

42

To provide a better understanding of how Orkla’s use of raw materials impacts the environment, we conducted an extensive study in 2013 based on purchasing data from 2012. Using our total consumption of 700,000 tonnes of biological raw materials7 as a starting point, we developed a model that can be used to calculate greenhouse gas emissions and water consumption. The model is used to calculate the total environmental burden that can be ascribed to Orkla’s activities, but it can also be used as a basis for calculating the environmental burden attributable to a company or a product. The total greenhouse gas emissions attributable to our consumption of biological raw materials amount to 1 million tonnes of CO2 equivalent. More than 55 % of greenhouse gas emissions are due to the production of meat, egg and dairy products, despite the fact that these products only account for 8 % of the total quantity of raw materials.

sutslipp fra produksjon av ammelignet med forbruk

dukter

100

Our 2013 greenhouse gas study of the environmental impact of Orkla’s packaging consumption revealed that it results in greenhouse gas emissions of 113,000 tonnes of CO2 equivalent.

In 2013, Orkla Foods Sverige invested in special facilities in Kumla and Fågelmara to manufacture plastic bottles. These will reduce the climate gas emissions previously resulting from the transport of ready-made bottles from other countries.

Klimagass utslipp fra produksjon av emballasje sammelignet med forbruk

80

Plast Metall Papir Glass

2013 60

stivelse

PACKAGING The packaging of a product must combine adequate protection in the interests of food safety and quality with the least possible burden on the environment. Orkla companies strive to develop optimal packagings, and have gradually reduced the amount used in the past few years. An effective packaging design reduces not just the quantity of waste, but also emissions during transport. The total amount of packaging used by Orkla in recent years has been around 100,000 tonnes.

100

80

60

r

40

40

20

20

%

%

ær

Tonnes raw materials

6 7

Carbon footprint

Tonnes raw materials

Carbon footprint

Vegetable raw materials: grain, potatoes, vegetables, fruit and berries, sugar, oils, cocoa Biological raw materials: meat, fish, dairy products, eggs, grain, potatoes, vegetables, fruit and berries, sugar, oils, cocoa.

ENVIRONMENT

At its factory at Ski, Lilleborg is focusing on reducing discharges of wash water to the municipal treatment facility. One important means of achieving this objective is to recycle as much wash water as possible. Work to this end has had high priority and yielded positive results for a number of years.

As a result of the company’s continuous efforts to bring about improvements, a successful change was made in the autumn of 2013 in the actual washing process in one of the mixing processes. This alone resulted in a weekly reduction in COD discharges of a full 200 kilos (16%). Overall, the company achieved an 11% reduction in COD discharges.

43

ENVIRONMENT Goals for 2014 • • • •

Launch more activities to reduce energy consumption, and increase use of renewable sources. Establish systematic monitoring of energy, and plans for energy-saving initiatives Take steps to improve monitoring of and further reduce of water use. Set concrete targets for reducing energy consumption, water use and waste.

XXX

Sustainability Report

44

2013

OCCUPATIONAL HEALTH AND SAFETY

OCCUPATIONAL HEALTH AND SAFETY

Healthy workplaces for everyone A safe and healthy working environment is a fundamental right of all workers. Orkla’s ambition is to operate with zero injuries

We aim to achieve our ambition of zero injuries through sound management of risk, systematic work to prevent injuries and work-related illness, and by involving all our employees. It is in our interests that our 17,000 employees are healthy, motivated and engaged.

Our approach

SAFETY There were very few serious incidents in Orkla in 2013, but a number of cases that could have had a serious outcome. These cases show that efforts to prevent injuries must continue to receive full attention in all parts of the organisation. The incidents will be analysed with a view to learning and to preventing anything similar happening again. Although the number of occupational injuries in Orkla is not at a satisfactory level, many companies saw a positive trend through 2013. A number of companies reported no lost-time injuries in the course of the year. The results show that working according to central EHS principles such as good housekeeping, engagement, skills upgrading and the will to learn from others brings about improvements. Work based on these important principles will therefore continue to be in focus and to receive emphasis throughout the organisation. At the same time, new measures will be introduced to ensure continued progress towards our goal of zero injuries. WORKING ENVIRONMENT AND HEALTH Our focus on the working environment and healthpromoting measures is not merely about getting people well and back to work more quickly. It is about creating a healthy and good working environment that in turn results in healthy employees in the long term.

LEARNING TO UNDERSTAND RISK One of Orkla’s fundamental principles is that environment, health and safety (EHS) work must be preventive. An understanding of risk is therefore a crucial aspect of our work to prevent undesirable situations and to create a good working environment. Risk analysis helps us to make improvements and to prioritise the most important means of preventing injury or illness among our employees. In 2013 we drew up common EHS standards and guidelines that are to apply to all business areas and activities. Implementation is to start in 2014. Training and enhancement of competencies are an important part of this work, and are based on knowledge and experience across the Group.

Orkla’s aim is for the principles of health-promoting workplaces to be adapted to its activities all over the world. A health-promoting workplace is important for each and every employee, but healthy employees also influence the working environment, and are necessary for the achievement of good financial results. The systematic work to bring about improvements is driven above all by a focus on preventive measures and rehabilitation. We believe it is important to actively follow up sick employees during their absence. We try to adapt everyday work situations in consultation with the person on sick leave to avoid long absences.

45

OCCUPATIONAL HEALTH AND SAFETY

health and safety

Backed by funding from the Danish Fund for Better Working Environment and Labour Retention (Forebyggelsesfonden), Axellus started a project in Ishøy, Denmark, to create a good safety and job satisfaction culture in the company and improve employee health. The goal was to reduce sickness absence among employees. As one of a number of measures, all employees at the factory have undergone training in risk assessment and verbal feedback to colleagues on aspects of risk in their everyday work. Exercise and stretching courses have also been held to encourage employees to get more exercise and activity.

Sustainability Report

46

2013

SICKNESS ABSENCE Results in 2013 Reported sickness absence in Orkla was 4 % in 2012 and 2013. Sickness absence for companies in Norway was 5.4 %, which is the same level as in 2012. There is ongoing work to lower the sickness absence. Goals for 2014 Our goal is for sickness absence to be less than 4 % throughout Orkla.

PERSONAL INJURIES Results in 2013 The Lost Work Day Rate (LWDR - number of personal injuries with absence per million working hours) was 5,4% in 2013, which is the same level as in 2012. The Total Reportable Rate (TRR - number of injuries leading to absence, a need for medical treatment or restricted work per million working hours) was 11.5 in 2013, compared with 12.7 in 2012. Goals Our vision and long-term goal is that nobody should be injured while working at Orkla.

OCCUPATIONAL HEALTH AND SAFETY

8 7

4.0 %

3.8 %

4.0 %

3.2 %

5.4 %

5.5 %

6.5 % 4.0 %

5.5 %

1

1

d

H1-value

6.6 %

2

3.4 %

3

3.6

Orkla Globalt Orkla Merkevarer Orkla Norge

5.2 %

Sykefravær (%)

4

4.3 %

4.9 5.4

5.5 4.6

5

3.6 %

2

4.5

3

4.5

4

5.6

5

6

5.8

6

4.5 %

7.0

7

09

10

11

12

13

%

09

10

11

12

13

47

XXX

Sustainability Report

48

2013

PEOPLE

PEOPLE

Human resource development In order to be successful as a per company, Antall årsverk forretningsområde we need to utilise the full potential of 24.4 % Orkla Foods 4 083 Orkla Confectionery & Snacks 2 247 13.4 % all our human resources, for the good Orkla Home & Personal 1 738 10.4 % Orkla International 4 957 29.6 % of the individual, Orkla, our customers Orkla Food Ingredients 2 366 14.1 % 971 5.8 % and the community.Gränges Orkla Eiendom 52 0.3 % Hydro Power Other Business Orkla Group

47 276 16 737

0.3 % 1.6 % 100%

People thrive when they have an opportunity to use their skills, develop, and be part of a good fellowship. Making it possible for this to happen is a responsibility, but above all it is a sound investment. Good results are created when all our employees master their existing tasks and extend themselves to conquer new ones. Developing capable, competent managers and employees is one of our most important goals, and a prerequisite for success as an organisation in the long term.

Our position on human resource development

49 2013

2013

EQUALITY FOR ALL Orkla has a corporate culture that is characterised by respect and equality. We believe these values are important for success in the competition for labour, and for utilising the full potential of employees in the best interests of the Group and the individual. At the end of 2013, Orkla had 16,756 employees distributed among 140 business units1 in 28 countries. Of these, 62 % were operational personnel and 38 % administrative employees. The great majority are permanent employees, and for the most part recruited from the country in which the business is located. The companies’ senior managers are also recruited locally. Orkla has no employees under the age of 18 with the exception of apprentices and trainees.

1

These include both production and administrative units.

2

According to annual internal reporting by companies on disputes, lawsuits, supervisory issues and similar matters.

Orkla does not tolerate any kind of harassment or other behaviour that may be perceived as threatening or demeaning. All employees have the right to fair and equal treatment. In 2013 Orkla had no cases relating to gender equality or discrimination2. Equal opportunities and diversity are topics in courses on Orkla’s Code of Conduct. In 2013, 1500 managers and employees completed these courses, compared with 350 the previous year.

PEOPLE

Sustainability Report

In order to ensure continued positive development in equal opportunities and diversity, Orkla initiated a collaborative project involving five other Norwegian companies. In 2013, the companies cooperated with the Administrative Research Fund of the Norwegian School of Economics and Business Administration on a survey of managers in the six companies. Orkla will present this research material to the companies’ management and HR functions in 2014, and use the insight gleaned from the project to develop a plan for further equal opportunities work.

also represented on Orkla’s Board of Directors and other governing bodies. In connection with the restructuring of the two business areas Orkla Home & Personal and Orkla Confectionery & Snacks, a liaison committee was established between management and employee representatives in both business areas. There were already liaison committees in Orkla Foods, Orkla Food Ingredients and Orkla International. Several companies also improved their procedures for internal communication and cooperation between management and employee representatives in 2013.

EMPLOYEE INVOLVEMENT Most of Orkla’s permanent staff has an annual performance review. Our ambition is that all employees should receive constructive and regular feedback on the work they deliver. All Group managers are also followed up with respect to their results in the spheres of human resource development and working relations.

COMPETENCY-BUILDING Orkla is known for the quality of the course and competency-building programmes it runs for Group employees. The Orkla companies conduct organised training activities on topics that are relevant to operations, such as quality, food safety and production systems, health, environment and safety, project management and sales-related tasks. A number of the companies also run occupational training programmes, either in partnership with public educational institutions, or on their own. Orkla is engaged in arranging a number of central competency-building programmes in leadership and key specialist areas.

To facilitate regular dialogue and cooperation between management and elected employee representatives, all Orkla’s companies have established company environmental councils or other formal systems. Employees are 50

Equal opportunities in practice In 2013, Orkla Foods Sverige developed an equal opportunities plan, with emphasis on making it easier to combine job and family, secure equal pay for equal work, and increase diversity in management teams and departments with a skewed gender distribution. In 2013 Orkla Foods Danmark drew up an equal opportunities policy designed to contribute to a better gender balance at management level.

Indian MTR Foods received the Healthy Workplace Gold Award for 2013 from the non-profit organisation Arogya World. The prize was a recognition of the company’s extensive efforts to strengthen the organisation through involvement, training and leadership and employee development systems. During the period 2010–2013, MTR Foods held 45,200 hours of training, averaging 41 hours per employee. In 2013 the company ran courses on corporate responsibility and business ethics for all its managers and employees.

GENDER DISTRIBUTION Results in 2013 At the end of 2013, Orkla had 7,798 women employees, or 46.5% of all employees. The corresponding proportion for 2012 was 47%.

CENTRAL COMPETENCY-BUILDING PROGRAMMES Results in 2013 A total of 393 employees took part in Orkla’s central competency-building programmes in 2013, compared with 540 the previous year.

The proportion of women managers at Group, business area and company level at year-end was 27.1%, compared with 28.6% in 2012. The proportion of women managers at all levels of the Group’s activities was 36.3%, as against 34.7% in 2012.

Goals for 2014 In 2014, Orkla intends to review the Group’s central competency-building programmes with the aim of increasing the effectiveness of the courses.

2013

PEOPLE

Zero tolerance for corruption Orkla has zero tolerance for corruption, price-fixing agreements, market sharing or other measures that place restrictions on free competition. Orkla’s overarching goal for its work on anti-corruption and competition law is to develop a corporate culture characterised by good judgement and an ability to handle difficult situations, to avoid breaches of competition rules and to promote sound business practices. All Orkla employees are required to abide by the principles described in Orkla’s anticorruption manual, competition law manual and Code of Conduct.

TRAINING To prevent breaches of anti-corruption and competition law regulations, the Group trains managers and employees in positions that may be exposed to risk of this nature. Anticorruption is a regular theme in Orkla’s management training and in the Group’s general corporate responsibility training. Competition law is also a regular theme in Orkla’s sales and purchasing competency programmes. Orkla’s Legal Affairs Department also holds courses on the subject for managers and key personnel.

The management of each individual company is responsible for communicating the Orkla Code of Conduct to all employees and making all employees who may be exposed to risk aware of the requirements in the anti-corruption and competition law manuals.

TRAINING IN ANTI-CORRUPTION AND COMPETITION LAW Results in 2013 A total of 1,320 managers and key personnel completed a course on anti-corruption in 2013. This represents 7.9% of the Group’s total number of employees. In 2013, 144 managers and key personnel completed a course on competition law.

In 2013 Orkla had no cases associated with anti-corruption and competition law regulations (according to annual internal reporting by companies of disputes, lawsuits, supervisory issues and similar matters).

Goals for 2014 In 2013 Orkla began developing an online training programme in anti-corruption and competition law which is to be implemented in 2014.

Highly Corrupt

51

Very Clean 0-9

10-19

20-29

30-39

40-49

50-59

60-69

70-79

80-89

90-100

No data

Transparency International’s Corruption PerceptionsHighly Index measures the perceived level of public sector corruption in countries and territories around the world. Very Corrupt Clean © Transparency International 2013. All Rights Reserved. 0-9 2013 10-19 20-29 30-39that 40-49corruption 50-59 60-69 70-79 80-89 90-100 data countries in which Orkla operates. Transparency International’s Corruption Perceptions Index for shows is widespread in several ofNothe

XXX

Sustainability Report

52

2013

ORKLA AND SOCIETY

ORKLA AND SOCIETY

The value of dialogue Orkla wishes to promote a sustainable value chain. By cooperating with others, we can make a difference.

We are convinced that we can contribute to a more sustainable future through product development and improvement initiatives that create value for society and Orkla alike. At the same time, we believe that our most important results will be created through combined efforts. A fruitful dialogue with stakeholders helps us to understand the views of others and the society of which we are a part. Cooperation with other companies, authorities, research communities and commercial and professional bodies paves the way for better solutions and advances than we can achieve individually. An active and open dialogue with stakeholders is therefore a fundamental principle for Orkla’s corporate responsibility work. We regard our employees, customers, suppliers, shareholders, the authorities and the local communities in which our businesses operate as our most important stakeholders. All these stakeholder groups are of importance to Orkla from a business perspective, but at the same time we have a responsibility to them. EMPLOYEES Dialogue with our employees takes place through open meetings, our intranet and other internal information channels, and through annual personal development dialogues, regular employee surveys and procedures for working with elected employee representatives. The most important topics in 2013 were restructuring and organisational development. CUSTOMERS AND CONSUMERS The Orkla companies have established customer service functions that deal with day-to-day communications from consumers and customers. The dialogue centres mainly on complaints about products and enquiries about the contents, effect or use of products. Companies often receive questions about food allergies, nutritional content, animal welfare and the environmental impact of products. In addition, Orkla engages in dialogue with retailers about current sustainability issues and contingency management.

SUPPLIERS The requirements Orkla imposes on suppliers are described in written agreements, and the companies have an ongoing dialogue with all regular suppliers. Suppliers of ingredients and packaging for food manufacturing are monitored through food safety procedures. Where there is a risk of breach of Orkla’s Supplier Code of Conduct, suppliers are monitored by means of inspections and ethical audits. The companies increasingly provide guidance and support to farmers, to promote safe and environmentally friendly agricultural methods. In the period 2012–2013, Orkla Foods Sverige helped vegetable farmers make the transition to IP-certified cultivation, and MTR Foods in India assisted dairy farmers in bringing about improvements. A number of companies have also engaged in projects to make improvements in supplier chains that present special challenges. This is described in more detail in the chapter on ”Responsible purchasing”. SHAREHOLDERS Orkla holds presentations and meetings with investors and analysts in connection with the publication of quarterly results. Orkla’s investor relations function responds promptly to communications from the investor market. Orkla’s annual financial statements, budget for the coming year and other relevant matters associated with the company’s governance are dealt with at the Group’s Annual General Meeting. Important topics for dialogues with shareholders in 2013 have included Orkla’s transition to a branded consumer goods company, Group results and the discontinuation of Orkla’s Corporate Assembly. AUTHORITIES Orkla engages in dialogues with politicians and government authorities at EU, national and local level on operating parameters and issues that require cooperation between the business sector and the authorities. Important issues in 2013 were the marketing of food and drink to children and adolescents, clear labelling of contents on food products, grant schemes for Norwegian agriculture and the food industry, efforts to bring about improvements in the supplier chain. In 2013 Orkla held dialogues with Norwegian authorities on self-regulation and marketing of food and drink to children and adolescents. We have contributed actively to the establishment of voluntary guidelines and the new

53

ORKLA AND SOCIETY

Sustainability Report

54

Food and Drink Industry Professional Practices Committee (MFU). Orkla Foods Danmark engaged in a dialogue with the Danish Veterinary and Food Administration, and Orkla Foods Sverige with the Swedish National Food Agency regarding the new criteria for the Green Keyhole label for healthy products. Latvian Spilva has been in a dialogue with the Latvian Ministry of Health on taxes and other measures designed to promote a healthier diet. Orkla has contributed to the establishment of the Food Industry Alliance in Norway, which is a collaborative project between agriculture-based manufacturing and the Norwegian Food and Allied Workers Union (NNN). Orkla has also maintained a dialogue with the Ministry of Agriculture and Food concerning potential changes in the grant schemes for Norwegian agriculture. Orkla wishes to issue a warning against changes in the schemes that will put Norwegian agriculture and food production at a disadvantage in competition with foreign food production. In 2013, Orkla continued its dialogue with the Ministry of Foreign Affairs regarding the possibility of establishing a joint public-private sector project to bring about longterm improvement in the cocoa sector in Côte d’Ivoire. Axellus has conducted a dialogue with Peruvian authorities on supervision of fish oil production in Peru, and Orkla Foods Sverige with the Thai authorities on sustainable management of tonggol tuna. Orkla received NOK 20.6 million in public subsidies in 2013, primarily for energy-efficiency measures, research activities and wage supplements. In addition the Group received NOK 130.7 million in raw material price compensation, i.e. compensation for the disadvantage to Orkla’s Norwegian business areas resulting from the regulation of Norwegian agricultural products.

2013

LOCAL COMMUNITIES The Orkla companies maintain dialogues with their local communities through meetings with the authorities, local organisations or neighbours about issues associated with operations or the development of the local community. The senior executive in the individual business is responsible for organising operating procedures that safeguard the interests of the local community, and the companies carry out health and environmental risk assessments. In 2013, Lilleborg invited the neighbours to a meeting and tour of the premises, after complaints of a smell of soap from the company’s warehouse in Oslo. Lilleborg has also held dialogues with municipal agencies about challenges relating to the company’s manufacturing operations at Ski and Flisa. Axellus’ factory for the production of Denomega fish oil

in Ålesund participates in the biomarine business cluster LEGASEA in Sunnmøre. The cluster was established in 2013, and consists of 20 companies in the fields of fishing, fish farming and industrial processing of marine oils and ingredients in Norway’s Møre region. Their ambition is to cooperate on achieving more sustainable and profitable utilisation of marine biomass, and the initiative is subsidised by Innovation Norway. SPECIAL INTEREST ORGANISATIONS Orkla and Orkla companies maintain a regular dialogue with consumer, employee and employer organisations and with environmental and human rights organisations about problems relating to our activities. In 2013, a number of the companies had a dialogue with Rainforest Foundation Norway and Greenpeace about the challenges presented by palm oil production, and Pierre Robert Group has been in a dialogue with the organisation Green Living about sustainability issues in textile manufacturing. The company has also taken part in a working group tasked with making improvements in the supplier chain for textiles and shoes, under the auspices of the Ethical Trading Initiative Norway (IEH). In 2013, Axellus took part in a similar working group for fish oil, also under the auspices of IEH. Latvian Spilva held a dialogue in 2013 with the Latvian Coeliac Society, and as a result has improved the labelling of its gluten-free food products. In the course of the year the Dutch company Sonneveld had a similar dialogue with the Dutch Coeliac Society. A number of Orkla’s Norwegian companies were criticised in 2013 by the Norwegian Association of the Blind and Partially Sighted (NABP) in connection with the latter’s ”Unreadable” campaign. The aim of the campaign was to raise awareness of the importance of having readable text on product packaging and other communication surfaces. The Orkla companies have been in a dialogue with NABP in connection with the campaign, and are considering how to make information easier to read. In 2013, Orkla conducted in-depth interviews with resource persons in selected organisations and professional communities in order to obtain input for an analysis of sustainability trends in connection with food. Orkla will use this input in its work to formulate goals and initiatives for the Group’s sustainability work towards the year 2020. Representatives of the WWF, the Norwegian Rainforest Foundation, Transparency International and IEH also contributed input to this work at an internal strategy meeting in the autumn of 2013. A number of the Orkla companies are partnering research communities in projects on nutrition and health. These projects are described in more detail on page 19.

REPORT OF THE BOARD OF DIRECTORS

Sustainability Report

Restructuring of businesses – and organisational development

Product safety and questions concerning products – Nutrition labelling – –

56

adolescents – Raw material price compensation and other operating parameters for food production – Food safety and product labelling (ongoing dialogue with supervisory authorities) – cocoa sector

– palm oil – – management of tonggol – – the cocoa sector in

2013

vocational training –

labelling –

activities – Restructuring of businesses

of palm oil –

Reduction of salt in food products – Development of healthy and ecologically sustainable food – Gender balance in management



ORKLA AND SOCIETY

Strong social commitment

Sustainability Report

Many of the Orkla companies hold a strong position in their local communities. The companies contribute to bonding within the local communities by partnering local authorities, schools and organisations in the spheres of sport, culture and humanitarian work.

Orkla Foods Norge supported Fredrikstad football team Gatelaget, a team of former substance abusers. Orkla Foods Sverige collaborates with the two organisations Allwin and Hjälp i Stan, which distribute food approaching the end of its shelf life to persons in need.

58

The Latvian company Spilfa supported organisations that assist orphans and foster families.

Lilleborg supported the Norwegian Society for Sea Rescue by donating a fixed amount per sold can of the boat-washing agent Jif Båtshampo, and the car-washing agent Jif Bilshampo. The Dutch company Sonneveld has been engaged in a project to develop nutritious food for the sick and elderly in the Netherlands. Among other things, the company was involved in the launch of a type of bread that is rich in protein. The Indian company MTR Foods contributed assistance to 200 poor children in the local community around the factory, among other things by providing school books. MTR Foods has also donated medicines for milk cows to local dairy farmers. Vitana supported local community projects and the Red Cross’ food aid programme. A number of companies support different kinds of sporting activities for youngsters in their local communities.

Orkla Confectionery & Snacks Norge supported agricultural training for cocoa farmers in Côte d’Ivoire. KiMs in Denmark has formed a partnership with Jobcenter Nordfyn, to provide work experience to persons who fall outside the labour market. The company also offers work experience placements and other support to local job centres. In 2013, twelve people were given an opportunity to work at KiMs through these schemes. 2013

Overall, Orkla and the Group companies contributed NOK 16.5 million in financial support in 2013 to activities in the spheres of sport, humanitarian work, culture, education and efforts to bring about improvements in the supplier chain. The companies also partner external research communities in the fields of nutrition and health. Orkla will provide NOK 7.7 million in support to such projects in the period 2013–2015.

KiMs Danmark also assisted the Danish organisation Child Aid Day in arranging street handball for children who live in institutions. Kalev supported the Estonian Association of Large Families as well as some cultural and sporting activities. Axellus participated in a cooperative project managed by IEH to bring about improvements in fish oil production in Peru. Pierre Robert Group donated clothes to the Red Cross, Active Child Aid, street children in Estonia and a maternity clinic in Madagascar.

Orkla has been a signatory to the UN initiative Global Compact since 2005. Orkla’s corporate responsibility prinsiples are based on those of the Global Compact, on the UN Guiding Principles on Business and Human Rights and on the OECD guidelines for multinational corporations.

ORKLA AND SOCIETY

6000 5000

2000

4,3 %

3000

3,2 %

4000

1000 mill kr.

2013

2012

Verdiskapning i Orkla 1. Lønn til ansatte 2. Til samfunn i form av betalte skatter (kontantstrøm) 3. Til aksjonærer i Orkla i form av utbytte utbetalt og tilbakekjøp/salg av egne aksjer

Total sales revenues (NOK million)

CAMPAIGNS WITH A PURPOSE Several Orkla companies partnered organisations’ campaigns in 2013, donating a portion of sales to support the work of the organisations. We used the strength and popularity of our branded goods to create greater interest in the issues we feel most strongly about.

Washing hands with soap is the simplest and most effective method we know of preventing illness in children. Over 780 million people lack access to clean water today, and 400 million of them are children. In 2013, Lano teamed up with UNICEF to help many children in poverty-stricken countries gain access to clean water and instruction in hand hygiene. Each Lano product sold in October 2013 contributed to 50 litres of clean water through UNICEF.

Orkla Foods Sverige has taken an active stand against bullying. In collaboration with the organisation Friends, they launched a shop campaign whereby buyers of the brands Felix, BOB, Ekströms, Risifrutti, Grandiosa, Önos, Fun Light, JOKK, Den Gamle Fabrik and Paulúns can help the organisation in its efforts to combat bullying at Swedish schools. Up to the present Orkla Foods Sverige has donated SEK 592,832 to Friends. The partnership has also resulted in an information campaign that has reached 248,000 pupils at 839 schools in Sweden.

In 2013, the Dutch company Sonneveld continued its partnership with the foundation Bake for Life. The foundation gives persons who are challenged in various ways training in baking at its bakeries in Africa. This enables disadvantaged individuals to get a job and a wage, and puts them in a position to support themselves and their families.

59

ORKLA AND SOCIETY

Awards to Orkla companies Orkla was on the Dow Jones European sustainability index for the third year in succession. The index consists of the best 20 % of a total of 600 European companies.

Sustainability Report

Orkla Foods Sverige was voted Grocery Supplier of the Year in Sweden. Orkla Foods Norge Storhusholdning was awarded the prize for Supplier of the Year 2013 in the service market in Norway. The presentation took place at NorgesGruppen and ASKO’s customer and supplier meeting. Spilva was voted role model for sustainable development by the Lativian employers’ association.

60

Kalev CEO Kaido Kaare was awarded the Badge of Merit of Harju County, Estonia, as a token of appreciation for Kalev’s support for the local community.

Rieber Russia was designated the Small Organisation of High Social Responsibility by the Moscow Regional Government for its contribution to the local community in terms of tax income and support for charities. Denomega won the prestigious iTQi Superior Taste Award for the best tasting, highest quality cod liver, salmon and fish oils. iTQi is an independent organisation of chefs and sommeliers which judges and rewards food and beverages from all over the world. Felix Austria came in third in the category Goldener Mittelbau in the voting on Austria’s Leading Companies in Burgenland. The companies’ financial results and efforts to promote sustainability over the past three years form part of the basis for the evaluation. The presentation of awards is arranged by KSV 1970, Wirtschaftsblatt and PwC. Felix Austria placed second in the category ”Family-friendly companies in Burgenland”. The prize was awarded by the Burgenland Chamber of Commerce.

Indian MTR Foods received the Healthy Workplace Gold Award for 2013 from the non-profit organisation Arogya World.

2013

-

ABOUT THE REPORT

About the report

Sustainability Report

62

This report presents Orkla’s work in the field of sustainability in the financial year of 2013. Unless otherwise stated, key figures are reported for the whole Orkla Group, including wholly-owned Group companies. In reporting goals and initiatives, we have placed the main emphasis on Orkla’s branded consumer goods area, which represent Orkla’s core business. The report is based on information obtained from Orkla companies through a number of internal reporting systems. As a result of differences in the reporting systems, key figures for various subject areas are reported in somewhat varying ways. The underlying data are specified for each key figure. Unless otherwise stated, key figures are as at 31 December 2013. Data for 2012 are stated excluding Sapa, to make the figures comparable with figures for 2013. The report is divided into chapters which reflect the main topics addressed in Orkla’s sustainability work: • • • • • •

2013

Food safety and product safety Nutrition and health Responsible purchasing Environment Occupational health and safety Human resource development and corporate culture

These topics were chosen in 2012 as part of the change in Orkla’s strategy from a complex group to a pure-play branded consumer goods company and as a natural extension of the sustainability work of the former business area Orkla Brands. In 2013, Orkla performed an analysis of important trends associated with the topics of food safety, nutrition and health, responsible purchasing and environment, and among other things conducted in-depth interviews with external experts and representatives of important stakeholder groups. The insight we gained through this analysis has influenced our work on Orkla’s Sustainability Report for 2013, with respect both to the issues selected for scrutiny and to our reporting of risk and opportunities for Orkla. In the report, we have described why we believe each of the six main topics to be material to Orkla’s activities. Orkla has previously reported according to the Global Reporting Initiative’s reporting standard GRI G3. In 2013, we reviewed the reporting requirements of the revised stan-

dard G4, and we made some changes in our reporting to align ourselves with the new requirements. Orkla’s sustainability reporting for 2013 includes data for a number of standard disclosures from GRI’s guidelines, but does not fully satisfy the requirements for reporting according to GRI G4. An overview of the indicators that are covered is provided at www.orkla.com/Sustainability/Results-and-reporting. Apart from this, choices and processing of information are based on GRI’s principles for good reporting practice. We have placed emphasis on providing a good overall understanding of Orkla’s work, reporting on material matters and initiatives, providing a balanced presentation, and making a comparison with 2012 possible. Orkla’s Sustainability Report 2013 shows the progress of the Group’s work to promote the Global Compact’s Ten Principles. A detailed overview of Orkla’s reporting for 2013 pursuant to the Global Compact’s Ten Principles is available at www.orkla.com/Sustainability/Results-and-reporting. Orkla’s Sustainability Report has been approved by Orkla’s Group Executive Board. The account of corporate responsibility in Orkla given in Orkla’s Annual Report for 2013 has been approved by Orkla’s Board of Directors. The Sustainability Report has not been verified by an external third party. The report should be viewed in conjunction with Orkla’s Annual Report for 2013 and other information available on Orkla’s website. For information on sustainability work in Orkla’s subsidiaries Sapa and Jotun, please see the companies’ own reports.

Copyright notice The content of this sustainability report is copyright protected material. The content may be freely distributed, reproduced and electronically stored. This consent is given on the condition that the source of the material is correctly cited. © 2014 Orkla ASA Photo: Ole Walter Jacobsen Photo: Orkla Foods Norge (page 15) Photo: Herman Dreyer (page 20-22) Photo: Pierre Robert Group (page 26, 36) Photo: Colourbox (page 32,37) Photo: UTZ Certified (page 33) Photo: Orkla Foods Sverige (page 35) Photo: Moment Studio (page 38)

Orkla ASA P.O. Box 423 Skøyen NO-0213 Oslo, Norway Office address: Nedre Skøyen vei 26 0276 Oslo Tel: +47 22 54 40 00 www.orkla.no Enterprise number: NO 910 747 711 If you have views or questions regarding Orkla or our sustainability work, send an email to: [email protected] Ø M ER KE T ILJ

24 1

16

M

7 TR YKKERI